China Urges Airlines To Cancel, Delay ‘09 Jet Delivery

China is urging its airlines to cancel or postpone aircraft scheduled for delivery in 2009 to counter weakening travel demand amid a global slowdown, the country’s aviation regulator said Tuesday.

The Civil Aviation Administration of China also urged Chinese airlines to let their aircraft leasing agreements with foreign companies run out, it said in a statement.

In order to control capacity expansion, airlines should also ground or sell aircraft, convert passenger aircraft into cargo aircraft, retire more old jets, and reduce the number of planes ordered from foreign companies, the statement said.

The CAAC won’t approve applications for new airlines, it said.

The government will also reduce the fees and taxes that airlines have to pay, the statement said. Chinese airlines will have some infrastructure fees from the second half of 2008 refunded, and are exempt from infrastructure fees and some business taxes for the first half of 2009, CAAC said.

Even before the global financial crisis, China’s beleaguered airline industry had been buffeted by natural disasters, fluctuating jet fuel prices and disruption from the Beijing Olympics earlier this year.

The parent company of China Southern Airlines Co. (ZNH), the country’s largest carrier by fleet size, received a CNY3 billion ($439 million) subsidy from the government last month, while other airlines are also seeking assistance.